Wash Sale Question

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lostdog
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Joined: Thu Feb 04, 2016 2:15 pm

Wash Sale Question

Post by lostdog » Tue Apr 10, 2018 4:20 pm

I sold some shares in my brokerage account to fund our emergency fund. I took a small loss on the sale. My wife does a bi-weekly contribution to her Roth account. The contribution is to the same fund that I sold in the brokerage account. We're married and file jointly. Will this be a wash sale when her auto contribution fills within the 30 days of the brokerage account sale?

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Artsdoctor
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Location: Los Angeles, CA

Re: Wash Sale Question

Post by Artsdoctor » Tue Apr 10, 2018 4:23 pm

Yes, it would be considered a wash sale:

https://www.investopedia.com/articles/r ... e-rule.asp

lostdog
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Joined: Thu Feb 04, 2016 2:15 pm

Re: Wash Sale Question

Post by lostdog » Tue Apr 10, 2018 4:31 pm

Artsdoctor wrote:
Tue Apr 10, 2018 4:23 pm
Yes, it would be considered a wash sale:

https://www.investopedia.com/articles/r ... e-rule.asp

Bummer. I'll have to redirect it to the sweep account within the roth for the time being.

Thanks
Last edited by lostdog on Tue Apr 10, 2018 4:33 pm, edited 1 time in total.

johan851
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Joined: Sun Apr 17, 2011 12:59 pm

Re: Wash Sale Question

Post by johan851 » Tue Apr 10, 2018 4:31 pm

Unfortunately, yes. I had a similar situation when filing my 2016 return.

Since the repurchased shares were in a tax-advantaged account, this is a little less complex because you don't have to re-adjust the cost basis of those shares. But that also means that don't get the advantage of adjusted cost basis in the future. The shares you sold at a loss in taxable are simply cancelled out by the shares purchased in the Roth IRA.

lostdog
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Re: Wash Sale Question

Post by lostdog » Tue Apr 10, 2018 4:34 pm

johan851 wrote:
Tue Apr 10, 2018 4:31 pm
Unfortunately, yes. I had a similar situation when filing my 2016 return.

Since the repurchased shares were in a tax-advantaged account, this is a little less complex because you don't have to re-adjust the cost basis of those shares. But that also means that don't get the advantage of adjusted cost basis in the future. The shares you sold at a loss in taxable are simply cancelled out by the shares purchased in the Roth IRA.
Makes sense. In the future I'll have to be more mindful of this. Thanks.

johan851
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Joined: Sun Apr 17, 2011 12:59 pm

Re: Wash Sale Question

Post by johan851 » Tue Apr 10, 2018 4:43 pm

A couple of easy things - if you have substantially identical holdings in taxable and tax-advantages, you may want to set dividends to not automatically re-invest. That's a good way to have a purchase surprise you in the wash sale window. I set that on all holdings because it lets me use dividends to rebalance a little bit.

If you can hold non-substantially-identical funds in tax advantages and taxable, that gives you some extra flexibility. If you have completion funds available in tax-advantaged space that can work well - for example, holding a 500 index in taxable (generally pretty tax efficient) and a small/mid completion index in an IRA.

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